|Liberty Media Chairman John Malone
Liberty Media Corp. would be open to discussing a deal to swap its stake in Time Warner for the media conglomerate’s AOL dial-up Internet business, Liberty Chairman John Malone said on Monday.
Although the opportunity for such discussions has yet to arise, Malone said Liberty Capital, which holds passive stakes in companies including Time Warner (NYSE: TWX) and Sprint Nextel, would prefer owning cash-generating operating companies.
“Clearly an exit from the Time Warner equity state into a cash-generating asset would be attractive, but at the current time, none have been proposed that we could take action on,” Malone said on a conference call on quarterly results.
“But we would continue to try and maintain the relationship with Jeff and the Time Warner folks in the event that such a transaction would present itself,” he said, referring to Time Warner Chief Executive Jeffrey Bewkes.
Time Warner has long been signaling its intent to divest itself of its ISP division. Meanwhile, Malone, who has amassed stakes in a broad portfolio of companies, earlier negotiated the swap of Liberty’s holding in News Corp. to gain control of U.S. satellite television provider DirecTV Group.
As of May 2007, Liberty held 103 million shares, or about 2.8 percent, of Time Warner after it swapped 68.5 million shares for Time Warner’s ownership of the Atlanta Braves Major League Baseball team and Time Inc.’s Leisure Arts group.
“They would come talk to us given our ability to tax efficient transactions for both parties,” Liberty Media CEO Greg Maffei said on the call. “We have good dialogue with them.”
Malone separately said he was puzzled over the current round of speculation over a possible merger of DirecTV with satellite TV peer Dish Network Corp.
While Liberty Media executives have said in the past that such a merger could be beneficial, Malone said on Monday a deal would be “problematic” from a regulatory perspective.
QVC, Starz revenue rises
Liberty Media Corp. said revenue from its QVC shopping channel, owned by Liberty Interactive, rose 4 percent and revenue from Starz Entertainment, owned by Liberty Entertainment, rose 8 percent in the second quarter.
Liberty Interactive revenue rose 9 percent, boosted by QVC’s international sales, offsetting a revenue decline in the United States. Liberty Entertainment group revenue rose 32 percent and adjusted operating income before depreciation and amortization rose 13 percent in the quarter.
The company said it now owns a 49 percent stake in DirecTV Group through Liberty Entertainment.
Liberty Media trades as three separate tracking shares, allowing investors to more closely follow its businesses.
Liberty Interactive (NASDAQ: LINTA) shares rose 14 cents, or 1 percent, to $14.41; Liberty Entertainment (NASDAQ: LMDIA) shares rose 61 cents, or 2.36 percent, to $26.46; Liberty Capital (NASDAQ: LCAPA) shares rose 40 cents, or 2.52 percent, to $16.29 on NASDAQ in afternoon trading.